Finance Minister P. Chidambaram on Sunday announced the government’s decision for major reforms in the financial sector by allowing 74 per cent foreign direct investment (FDI) in Indian private banks as a part of the roadmap to open up the sector by the end of 2004. Addressing the India Economic Summit, Chidambaram said the other two priority areas would be insurance and pension sectors.‘‘The government is committed to the March 5, 2004 notification allowing foreign banks to acquire up to 74 per cent in private banks in the country, subject to regulations,’’ Chidambaram announced. ‘‘But I must warn you that our public sector banks will give you a run for your money,’’ he said.‘‘There is a discussion going on in the government and a Bill (to amend the Irda Act for hiking the FDI cap in insurance) will be introduced early next year,’’ the FM added.In his Budget, Chidambaram had proposed a hike in the FDI cap in insurance from 26 to 49 per cent to enable foreign firms to infuse more capital in the Indian venture. The FM said the pension fund regulator would also be in place by the end of this year and the new pension system would be open for every subscriber.He said the UPA stood by the notification issued by the NDA government to enable FDI in private banks up to 74 per cent.
